People walk past a Greek flag in central Athens yesterday. Eurozone ministers struck a long-delayed bailout deal with Greece to unlock badly needed rescue cash.
Luxenbourg: Euro zone governments threw Greece another 11th-hour credit lifeline worth $9.5bn and sketched new detail on possible debt relief as the IMF finally offered to help out after two years of hesitation.
The €8.5bn of loans from the euro zone’s 18 other states, including Berlin which is wary of easing terms for Greece ahead of a German election in September, lets Athens avoid defaulting on bailout repayments next month and recognises unpopular cuts and reforms the left-wing government has made. “There is now light at the end of the tunnel,” Greece’s Euclid Tsakalotos told reporters after meeting fellow euro zone finance ministers and IMF chief Christine Lagarde in Luxembourg.
The accords gave enough clarity to investors on how Greece can manage its crushing debt burden that it should be able to borrow on the market again “in due course” after effectively relying on bailout support from other sovereigns since 2010.
A proposal by the French government under new President Emmanuel Macron to help bridge differences on debt relief will underpin further euro zone discussions, officials said. Macron wants to work with Germany to strengthen the 18-year-old common currency, which was nearly wrecked by the sovereign debt crisis.
German Finance Minister Wolfgang Schaeuble, whose insistence on austerity reforms to public finances in Athens have long made him a hate figure for many Greeks, said lawmakers in Berlin would review the deal on Friday to see if it deviated from a 2015 bailout enough to need new German parliamentary approval.
Euro zone bailout fund chief Klaus Regling said his European Stability Mechanism would disburse €7.7bn in early July to cover €6.9bn in maturing debt and 0.8bn of arrears. A further €0.8bn euros would be disbursed “after the summer”.
The International Monetary Fund would join the current bailout, Lagarde said, offering Athens a standby arrangement of less than $2bn, the length of which will be tailored to match the end of the euro zone bailout in mid-2018.
However, IMF will not disburse any of its money yet. It still wants the euro zone to offer sufficient extra detail on possible debt relief in 2018 to let the Fund calculate that it will be enough for Athens to sustain its debt in the long run.
